It is known to heat water from water dispensing fountains so as to dispense both refrigerated water or water at room temperature as well as hot water for the preparation of tea or instant coffee. With gravity fed water heaters incorporating water heaters, it is a common problem that water vapours are released back in the refrigerated reservoir thereby raising the temperature of the refrigerated water. By doing so, the compressor is continuously switched on to maintain the refrigerated water at a desired temperature. Accordingly, this results in excess energy consumption. Another problem with existing systems is that they utilize metal tubes and metal water heaters. Accordingly, there are soldered joints in connecting these metal parts and this results in the formation of rust and corrosion and eventually water leaks develop. The rust also often affects the quality of the water which is consumed.